Friday, October 1, 2010

Finance tips for the new grad

I didn't become a frugality freak until recently. I came late to the job world, and it wasn't until my late twenties that I found myself really, truly and unavoidably on my own. Cut loose from my parents' credit-funded child rescue service, I was in a tailspin. I'd majored in English lit and theater in college, but left before getting a degree. Without strong employment prospects, I took whatever office and temporary jobs I could find.

Unfortunately, I had a huge sense of entitlement about my standard of living. On eight dollars and fifty cents an hour, I had to have a car and a one-bedroom apartment close to my job in the high-rent downtown district. I ran to the bank each payday to cover checks before they bounced, then had no money for the next two weeks. Saving was a foreign concept. I moved to the suburbs where rent was cheaper, but I was spending more for gas. I well recall a certain evening on the day before payday when I realized I had no money to fill my empty gas tank, and I had to spend the night in the infirmary in my office

Eventually I just got fed up, and I changed my life. I'm grateful for the many improvements I currently enjoy, including stable employment, all of life's necessities as a matter of course, and a few affordable, planned-for luxuries every now and then. I often wish I had been more money conscious when I was younger. Here's what I would like to tell the younger version of myself, or another twenty-something today, about managing money

• Forget cars and live small. Lattes aren't the problem. The two largest areas of your budget are housing and transportation. Shaving those expenses way down will leave you plenty of breathing room financially. Take the bus and live in a studio apartment, or with a roommate, for as long as you can stand it. You can expand later on when your paycheck does

• Compress your closet. Beyond basic hygiene and a reasonable degree of attention to dress, it doesn't matter what you look like. Buy the best-quality clothes you can find that will satisfy your minimum requirements for your job and personal life. Buy a few good-quality basics in dark colors (they look more expensive), and use accessories to vary the look